The Control Accounts - Trade Receivables And Trade Payables

Question 1

Why must accurate, up-to-date records be maintained of every transaction pertaining to a customer that has an account with the business?

Answer 1

So that the balance owing is readily identifiable.

Question 2

What are the debtors ledger and creditors ledger collectively known as?

Answer 2

The subsidiary ledgers

Question 3

What structure are accounts in the subsidiary ledgers constructed with?

Answer 3

Statement structure

Question 4

Is there an indication of date in subsidiary ledgers?

Answer 4

No, they are continuously updated

Question 5

How should an account reference be indicated in the subsidiary ledgers?

Answer 5

In brackets beside the debtor name

Question 6

What does a subsidiary coding system represent?

Answer 6

Different types of transactions

Question 7

What is the control account system?

Answer 7

At the end of every month, the balances of each debtor/creditor from the subsidiary ledgers are recorded on a debtors/creditors list and compared with the trade receivables/payables accounts from the general ledger